Alabama Life and Health Chapter 4 Life Policy Provisions & Options

State law may vary, but life insurance policies GENERALLY cannot be backdated more than ______ months.

6

When a life insurance policy's ownership is changed from the original owner to a new owner without payment, this is known as a(n) ___________.

Absolute assignment

Amanda's life insurance policy names her sister Joyce as irrevocable beneficiary of the policy proceeds. This means:

Amanda can borrow against the policy's cash value, but only with Joyce's permission

Which of the following beneficiary designations is a class designation?

Any children of this marriage

The technical name of the person who makes a policy assignment is the:

Assignor

If overdue premiums are not paid by the end of the grace period, a traditional Whole Life policy will automatically:

Become extended term

Mona let her permanent policy lapse. She discovered there was $2,498 in cash value remaining in the policy and decided to pay off some of her credit card debt. She exercised which Nonforfeiture Option?

Cash Surrender

An insured goes to the bank for a business start-up loan. Asking for more security, the bank agrees to accept a(n) __________ on a permanent life insurance policy owned by the customer.

Collateral Assignment

All of the following are common exclusions, except:

Driving

The nonforfeiture option that provides the most AMOUNT of coverage for the least duration is:

Extended Term

A policyowner allows a policy to lapse and the insurance company converts the policy to the extended term option. Which of the following from the original policy will automatically carry over into the new policy?

Face value

Each of the following is a source of life insurance policy dividends, except:

Guaranteed cash value accumulations

A Tertiary Beneficiary is the person who receives a death benefit payment in which of the following scenarios?

If the primary and contingent beneficiary die prior to the insured

Which of the following identifies the parties to the contract and the perils it covers and the circumstances under which the insurer will pay a life insurance policy claim?

Insuring Clause

If a beneficiary has the choice and is interested in capital conservation, then which of the following settlement options should be chosen?

Interest Only

Fred purchased a $100,000 policy naming his wife, Wilma, as primary beneficiary, and his only child, Pebbles, to receive any proceeds if Wilma dies before Fred, or if she dies after Fred, but before receiving all the policy proceeds. Fred elected the interest settlement option for Wilma, with the right of withdrawal after 5 years. No settlement option was stipulated for Pebbles. Fred dies on May 6th, 1991. When Fred dies, his insurance company will make settlement by paying:

Interest in periodic payments to Wilma

K has a $10,000 traditional whole life policy with a loan outstanding of $1,000 and a 5% interest charge. At the end of the first year of the loan, K did not pay the loan interest. What is the result of K's inaction

K's new loan balance is $1,050

What is the easiest and best way to assure that the life insurance policy's death proceeds don't end up in probate court process?

List a primary and contingent beneficiary by their full name and relationship to the insured

What is a material misstatement?

One which would have caused the insurer to not issue the policy had it been known

Frank has a life insurance policy in which he chooses to have the dividends increase the death benefit. Which Dividend Option did he select?

Paid-Up Additions

If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the policyowner can borrow up to:

The entire accumulated cash value of $6,000, less interest for 1 year

What is the purpose of nonforfeiture values?

Without them, any cash values would be retained by the insurer when the policy lapses due to non-payment of premium

If a life insurance policy lapses due to nonpayment of premium, then reinstatement requires:

he payment of back premiums, plus interest, and proof of insurability

With a Collateral Assignment of a life policy to a creditor, which of the following is true?

you assign a partial amount of the policy values to the creditor

K has a $50,000 traditional whole life policy in force with $25,000 of cash values. Her outstanding loan and loan interest total $5,000. If K surrenders the policy, K will receive:

$20,000

Which of the following is the proper sequence of beneficiaries?

Primary, contingent, tertiary

The nonforfeiture option that provides coverage for the longest period of time is:

Reduced Paid-Up

The nonforfeiture option that provides protection to age 100 is:

Reduced Paid-Up

Which of the following documents always constitute part of the entire contract?

The application and policy